Release estate is an odd situation like Ben said. It's not always true they would rise in "value" (respective to the declining US dollar). More likely would be that a foreign investor essentially gets a discount versus the US buyer who has to pay more dollars to get that home.Originally Posted by chloevankatie
What happens is that real estate is a unique leveraged asset. With this investment approach in a declining dollar value scenario you can then demand more money from tenants or from potential buyers. Ideally you have invested prior to the devaluing event or not terribly far into it.
A home is a long term investment and useable asset. You will also be in a beneficial position as the dollar devalues but you have a fixed 30yr loan. It's a good investment b/c unlike, for example, a gallon of milk, or even a car, those will be gone in a week or within 5yrs. So, if you bought milk last week at $4/gal, a month later milk could be costing $5/gal due to hyperinflation.
A home though is unique and won't go through that same situation b/c it's a very long term useable asset and it is also leveraged against a banks money. You will not pay more next month or next year (so long as it's a fixed rate loan) regardless of the dollar value. This puts you in a better position b/c you can either weather the storm and pay the same payment during the hyperinflationary event or you can even demand more money (more dollars) from tenants or buyers. In effect this makes fixed rate real estate loans immune to hyperinflation events from the perspective of the leveraged investor (you).
The value doesn't necessarily rise but the cost certainly can and usually will for any new buyer (considering any inflationary or hyperinflationary periods). And there is also always the concept of it being a long term useable asset with the very common trend of increasing value (though this is still very dependent on the location, various economic impacts, features/condition of the home).
That means if you hold the property through the devaluing event you have strong chances of recovering and increasing your homes value ultimately.
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